SIMULATIONSX

XPERIENTIAL NATURE OF OUR SIMULATIONS ENABLE THE DELEGATES TO LEARN BY DOING!



INVENTORY MANAGEMENT

One use of inventory is

 to tightly link a firm s production with its customer s demand.
 to ensure that item cost is maximized.
 to tightly link production and distribution processes.
 to provide a hedge against inflation.

Which of the following is NOT a type of inventory?

 raw material
 MRP
 finished goods
 work-in-process

In the basic fixed-order quantity model, if annual demand doubles, the effect on the Optimal Order Quantity (EOQ) is:

 it increases by about 40%
 it is about 70% of its previous amount
 decreases by a factor of 2
 it is half its previous amount
 it doubles

Reorder point models are primarily used for independent demand items.

 True
 False

In a two-bin inventory system, the amount contained in the second bin is equal to the:

 safety stock
 optimum stocking level
 amount in the first bin
 EOQ
 ROP

The difference(s) between the basic EOQ model and the production order quantity model is (are) that

 the production order quantity model does not require the assumption of instantaneous delivery.
 A. the EOQ model does not require the assumption of known, constant lead time.
 the production order quantity model does not require the assumption of known, constant demand.
 there are no holding costs in the production order quantity model.

Monitoring the temperature of tomatoes during shipment would best be done using:

 RFID tags
 Universal Product Codes (UPC)
 Bar codes.
 ROP
 GPS

The Basic EOQ model ignores:

 A items
 Ordering costs
 Holding costs
 Purchasing costs
 B and C items

What items do students typically buy on an ROP basis?

 textbooks
 wedding gifts
 bran muffins
 gasoline for car
 computer software

A system that triggers ordering on a uniform time basis is called a

 fixed-period system.
 fixed-quantity system.
 EOQ.
 reorder point system.

Extra units that are held in inventory to reduce stockouts are called

 just-in-time inventory.
 reorder point.
 demand variance.
 safety stock.

Space considerations are not included in any of the economic ordering models.

 True
 False

For a company that manufactures most of its products as standards, more inventory should be placed

 closer to the customer.
 within the plant as work-in-process.
 close to suppliers.
 equally distributed between the plants and warehouses.

If both the lead time and daily demand are constant (no variation), the ROP is equal to:

 Safety stock
 Daily demand times lead time.
 Expected demand plus safety stock.
 Expected demand minus safety stock.

The two most important inventory-based questions answered by the typical inventory model are

 how many of an item to order and with whom the order should be placed.
 how many of an item to order and what is the cost of this order.
 when to place an order and what is the cost of the order.
 when to place an order and how many of an item to order.

Most inventory models are made based on:

 Minimizing lead time
 Optimum influence on demand
 Minimizing setup times
 Cost minimization
 Profit maximization

With the quantity-discount model, an order level might not be at a minimum point of a total cost curve.

 False
 True

In the basic Q model, if the lead time doubles, the EOQ will:

 decrease by half
 remain the same
 increase, but not double
 double
 none of the above

A firm producing medical equipment to customer specifications is most likely using a

 make-to-order strategy.
 make-to-stock strategy.
 assemble-to-order strategy.
 mass production strategy.

Fixed-order quantity models are:

 Fixed for a specified time period
 Event triggered
 Made up of a variable order size
 Time triggered

If the production rate in an economic production lot size model is very much larger than the consumption rate, the results are practically the same for economic production lot size and EOQ.

 True
 False

The goal of ABC analysis is to

 determine the profitability of items.
 estimate dollar value per pound.
 to identify the A items for better inventory control.
 estimate average volume per dollar value.

Policies based on ABC analysis might include investing

 extra care in forecasting for C items.
 more in supplier development for A items.
 more in inventory security for C items.
 the most time and effort verifying the accuracy of records for B items.

ABC analysis divides an organizations on-hand inventory into three classes based upon

 the number of units on hand.
 annual dollar volume.
 annual demand.
 unit price.

Which of the following inventory systems would be most appropriate in controlling many items ordered from the same vendor?

 Materials Requirements Planning System
 Fixed Time Period System
 Fixed Order Quantity System
 One Period Inventory Model Using Marginal Analysis

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

 Annual holding cost, annual purchasing cost and annual delivery costs are the relevant costs in the
 Quantity discounts can occur and taken into account in the total cost calculations.
 Uncertainty in leadtime may not exist.
 Partial receipts are allowed.

Inventory record accuracy would be decreased by

 reorder points.
 cycle counting.
 increasing stockroom accessibility.
 ABC analysis.

Which one of the following statements is best?

 A fixed interval system requires more safety stock than a ROP system.
 In a fixed interval system, the value of Q is kept the same from one cycle to another.
 A fixed interval system lends itself more to quantity discounts than does a ROP system.
 A fixed interval system requires more administrative control and computer support than does a ROP sy